Knowing When to Walk Away
Drew Register, PharmD, shares his story of walking away from a real estate investment deal when he recognized that it did not live up to the initial analysis and how a conservative approach to real estate investing can benefit pharmacist investors even when a deal doesn’t make it to the closing table.
About Today’s Guest
Drew Register, PharmD, is a 2016 graduate of the University of Louisiana at Monroe School of Pharmacy. After graduating, he completed an Executive Residency in Association Management & Leadership and was subsequently offered his current role as the Associate Director of Membership Engagement and Communications at the American Pharmacists Association. A few years into his position, Drew realized his next personal goal was becoming an entrepreneur and pursuing financial freedom. After researching and learning about various side hustles, he ultimately continued coming back to real estate investing. Drew has spent the last few years honing his knowledge and expertise, establishing relationships with key mentors, educating himself through podcasts and eBooks, and most recently, completing the inaugural YFP None to One REI course. Drew has now surpassed his savings goal for a down payment on a rental property and feels confident and ready to purchase a property when the right deal presents itself.
Episode Summary
This week, your hosts of the YFP Real Estate Investing Podcast, Nate Hedrick, PharmD, and David Bright, PharmD, MBA, BCACP, FAPhA, FCCP, are joined by Drew Register, PharmD, who discusses how he knew when to walk away from a deal. Drew started his real estate investing journey to attain financial freedom through a long-standing, trusted method of investing. Drew focuses on finding the best return on investment that will work for him long-term, not just in the present. In assessing what works best for him in a property, Drew considers the location, bedrooms and bathrooms, neighborhood type, rent rates, the repairs needed, and how involved he would have to be for each property, considering he plans to invest out of state. After going through the None to One Group Coaching program, Drew felt confident in analyzing, selecting, and later walking away from a deal because he recognized it didn’t live up to the initial estimates for cost, taxes, and rental income. Ultimately, Drew found the experience of walking away from his first deal to be a positive one because he formed great connections and built his knowledge in the real estate investing space, making him well-prepared for when the right deal comes his way.
Links Mentioned in Today’s Episode
- Apply Now! None to One Group Coaching Program: Use code PODCAST20 for 20% OFF
- YFP Real Estate Investing 60: Helping a Pharmacist Go From “None to One”
- American Pharmacists Association (APhA)
- APhA Annual Meeting
- Your Financial Pharmacist
- YFP Webinars
- BiggerPockets
- Follow Drew Register on Instagram
- Connect with Drew Register on LinkedIn
- Join the YFP Real Estate Investing Facebook Group
- YFP Real Estate Investing
- Your Financial Pharmacist Disclaimer and Disclosures
Episode Transcript
[INTRODUCTION]
[00:00:08] NH: Hello and welcome to the Your Financial Pharmacist Real Estate Investing Podcast, a show all about empowering pharmacists to achieve financial freedom through real estate investing. I’m Nate Hedrick. Each week, my co-host, David Bright and I explore stories from pharmacists all over the country, who are achieving their real estate goals while maintaining a meaningful career in pharmacy. Whether you’re a first-time investor, or a seasoned pro, we’re here to provide education and inspiration about the world of real estate.
Please note, this podcast is intended for educational purposes only, and should not be considered financial, or investment advice.
[ANNOUNCEMENT]
[00:00:42] NH: Before we jump in today’s real estate investing podcast episode, we wanted to remind you that applications for the second round of our None to One group coaching program are due by 11:59 pm, Eastern Standard on August 22nd. The None to One group coaching program led by David and myself to pharmacists and real estate investors is designed for individuals who are ready to take the real estate investing plunge, but need some help putting those final pieces together. We’ll guide you through finding, financing, fixing and filling your very first rental property through a mix of structured learning and real-world examples during our live classes.
[00:01:17] DB: We’re giving our podcast listeners an exclusive 20% discount on the None to One course. Enter coupon code PODCAST20 on your application to redeem the discount. Again, that’s coupon code PODCAST20 on your application for 20% off the course. Get all the details and apply for the course by August 22nd, by visiting yourfinancialpharmacist.com/nonetoone. Again, that’s yourfinancialpharmacist.com/nonetoone. Can’t wait to see you in the course. All right, let’s jump into the show.
[EPISODE]
[00:01:52] NH: Hey, David. How’s it going?
[00:01:54] DB: Hey, good. Thanks. How you doing, man?
[00:01:56] NH: Good. I’m doing well. Summer is winding down. But our search for vacation homes still continues. We’re hoping for some more deals to start popping up here as the summer winds down. Maybe the market will pick up from a vacation perspective for us. It’s a good time.
[00:02:12] DB: Yeah, I know. We’re recording this in August 2022 right now. It does seem like inventory is rising. I’m seeing a few more options come up, which hopefully is playing with some of those bidding wars and helping you to get more options. We threw a couple offers out this week also, just as things are hitting the markets. Yeah, hopefully things open up a little bit at least.
[00:02:30] NH: Yeah. We saw one we didn’t have to fight anybody for. We could have put a bid on it if we wanted to. It was astounding. Interest rates fell a little bit, which doesn’t hard either. It’s been good.
[00:02:41] DB: Yeah, yeah. Lots changing. I think, even some of that just seasonal, where in a typical market, and I don’t know when we’re going to start feeling like it’s typical again. But in a typical market, things slow down into fall. Maybe we’ll see that here too, with the back-to-school season.
[00:02:57] NH: Yeah. Speaking of back to school, we are in a school mindset right now. When this podcast goes live, we will be two days away from the end of our application window for the next round of our None to One course. We wanted to make sure to come to you guys on this episode, remind you about that application window, because it is closing very soon and we don’t want you guys to miss it.
[00:03:21] DB: Yeah. It really was a ton of fun working with a bunch of pharmacists last spring about just education and brainstorming and even a little accountability in terms of achieving real estate goals. I know, we had Marissa back on episode 60 talking about the house that she found and how that was a great start for her. She found a great deal, a great option for her. Today, we have another guest from that first cohort of participants.
[00:03:44] NH: Yeah. Today, we’re talking with Drew Register. Drew is a pharmacist. He is a pharmacist with APhA. He, again, was in the None to One founding class and just a really upstanding guy to talk to. Great pharmacist, great investor, really cool mindset. I think, just really humbled that he was able to come on the show and share his type of story, which is unique for us.
[00:04:08] DB: Yeah. In a competitive market, I feel like, it’s really important to when you’re thinking about pricing and interest rates that may not be in the buyers favor, just important to be patient, watch all your angles, check your work, do the typical pharmacist thing. Triple check everything. We have a lot of guests that come on, and they talk about their success, but they’re investors that buy houses and do get hurt. For safety-oriented pharmacists, I know that that scary part of real estate investing is there. I love Drew’s perspective on talking about when to walk away and when safety matters in that.
[00:04:42] NH: Yeah. I think that was important to us to bring Drew on, because it’s a real story. We’re really trying to, with this podcast, I think David, something that you and I talk about all the time is that we don’t want to just share the good, or just show the bad. We want to share what real estate investing is actually like. Drew’s story is perfect for that, because it shows what it can be like to take a conservative approach, and know when to walk away and patiently waiting for that better investment to come along.
[00:05:09] DB: Yeah. I know you and I have both been there when it comes to making an offer and we don’t get it, or making an offer, we get it, but then something gets ugly and we have to walk away. I think that is just a part of real estate. Particularly for someone just coming into this like Drew. I think it’s a great sign of maturity and wisdom and restraint from a first-time investor to not just jump in and get emotionally attached. I was just super impressed. I’m hoping that that’s an encouragement to everyone listening that sometimes it is okay to walk away from a deal particularly, and even in a tough market season like we’re seeing right now.
[00:05:43] NH: Yeah. Well, hopefully you guys will take the same level of wisdom and just again, cautious patience from Drew’s story, learn a little bit more about what he does to find a good investment. With that, we’ll take you to the episode. Hope you guys enjoy.
[INTERVIEW]
[00:05:59] NH: Hey, Drew. Welcome to the show.
[00:06:01] DR: Hi, guys. Thank you for having me. Excited to talk to you guys tonight.
[00:06:05] NH: Yeah, we’re excited to have you on. We became good friends over the last year or so, as we spent a lot of time together on some calls and talking all things real estate, all things pharmacy, and so excited to have you on to continue that discussion, but in a more public format. This is pretty cool.
[00:06:20] DR: Yeah, I’m excited. I’m glad that you use the word friends. I felt like I was a little bit of a bother at times, but I appreciate you guys always being so available to help me with any last-minute decision-making. It’s been a huge blessing.
[00:06:34] NH: Not a bother at all. In fact, why don’t we jump right in and you can tell people a little about your pharmacy background and real estate and how you got to where you are today?
[00:06:42] DR: Sure. Yeah. I’m born and raised in a small town in North Louisiana called Monroe. Went to high school, college, and then ultimately, pharmacy school there. I’m a 2016 graduate of the University of Louisiana Monroe, School of Pharmacy. Really, all throughout pharmacy school, I was involved in pharmacy organizations. As I navigated my journey of pharmacy school, I was really open-minded to the future. I didn’t have any set plans, or ideas as far as practice settings, so I was really just trying to meet as many people as I could, learn as much as I could about the various practice settings.
I kept going back to my association involvement. I remember there was a light bulb moment at the end of my first year when I went to APhA’s annual meeting. One of the speakers, the first speaker that I encountered, she was a pharmacist who worked for APhA, and I thought, “Man, how cool is that? She’s a pharmacist, but she actually works for the association world.” I saw the great work that APhA was doing. I was really involved in my chapter, and I saw the impact that we were having on our community. I thought, how cool would it be to be able to work at that level and impact the entire profession.
Long story short, that stuck with me in the back of my mind as I continue the next few years in a pharmacy school. Ultimately, I decided, in my final year that I wanted to pursue an externship with APhA, and went through that experience and it solidified my decision to pursue the association management route of things. At that same time that I was on the rotation, actually applied for a residency program with the same association. Found out that I was accepted into that residency. Completed the residency and ultimately, stuck around.
I am currently still working for the American Pharmacists Association, and I serve as our Associate Director of Membership Engagement and Communications. Basically, what that means is that I am not a practicing pharmacist. I tell people, mostly, that I do a lot of membership and marketing. Definitely a niche type of position. I really love the work that we do at the association level; can really advance the entire profession as a whole. That’s where I’m at with my pharmacy journey today.
[00:08:54] NH: Yeah. You and I have got way back even further than that, because you’ve been, again, with the membership and all the engagement that you’ve been doing with new members, and some of the new practitioner lunch and learns, and the webinar series that we’ve done with Your Financial Pharmacist over the years. Yeah, I love the work that you guys are doing over there. It’s awesome. Again, good collaboration for us.
[00:09:11] DR: That was one of the most exciting things about my position was having the partnership with YFP, because it essentially forced me to attend some of those webinars when I was fresh out of school. I probably wasn’t super focused on my financial journey at that point. It really got my wheels turning and got me thinking about what that would look like for me and what my goals and next steps would be in the financial realm of things. Very thankful for that.
[00:09:36] DB: Love it. Love it. Well, clearly, you’re on this podcast now. Somehow this marketing and all this different journey wove into real estate. How did real estate enter that picture?
[00:09:47] DR: This is an interesting question. I think, to be honest with you, I was struggling after I first started my position. I was probably one or two years in and I really was feeling like something was missing, or I didn’t really know what the next steps were. The best way that I can describe what I’m talking about is in high school, I was so focused on my education and getting into a good college. Then in college, I was focused on developing my resume and being involved in organizations, making sure I can get into a good health professions program.
Once I got into pharmacy school, repeat the cycle. I was figuring out that I wanted to pursue a residency program, again, focused on making sure I had a good resume and CV for that, I had good grades, things like that. Once I got into the residency program, I was thinking, okay, now I want to get a good job. Then once I hit that ceiling, I was struggling with like, now what do I do?
I remember talking to my mom and I was like, once I get a job, what do I do now? Do I just go to work and pay taxes until I retire? Is this really all that it’s cracked up to be? I think, the reason for that feeling is that I’m a really goal-oriented and driven person, and I’ve always had that next step to work toward. Once I got a job, that was missing. I think for me, it was really figuring out, okay, what am I going to use my time to pursue? What’s the next thing that I want to accomplish?
I started realizing, I was taking the metro every morning, every night for – it was two hours my day. I’m packed in like a sardine. I started to realize, okay, I probably don’t want to go to an office the rest of my life. Wouldn’t it be great to have a little bit of freedom? That’s really what motivated and began this whole journey for me. I know, it sounds cliche to say, what I wanted was freedom. When I say that, I wanted to have freedom to be in control of my own destiny. If I wanted to go to an office, I could. If I wanted to live in a certain place, I could.
I didn’t want to be tied down to a specific employer and have really no control over the decisions I was making, if I wanted to travel. I think pursuing freedom and financial freedom and becoming your own boss allows for a lot of opportunity to take your destiny and your future into your own hands. I realized, that’s what I wanted. Not right away, but at some point in the future that’s what I wanted to start taking steps to work toward.
[00:12:19] NH: What was it about real estate that you feel was the thing that was going to help you pursue that goal? I think, a lot of people have that thought, right? You get to this point, and I’m totally with you, I did the exact same thing, where it’s like, okay, well, what’s next? I have this great job, I have a good title. Okay, now what? I resonate with that really strongly. Why was it real estate that you thought was going to be the piece that moved your financial journey in that direction?
[00:12:42] DR: I felt stuck for a little while. Because once I had that feeling and realized that’s what I wanted to pursue, I was like, “How do I get there?” I really started to explore a variety of what I would call side hustles. I remember, I would just do research in my free time, especially in the evenings after work. Was learning about things like dropshipping on Amazon, or sneaker reselling. I’m a big Yeezy guy. These were things where I was like, “Okay, I see people do this, and they’re profitable.”
I remember, I was starting to learn about the stock market. Again, I was going to these YFP webinars and I was getting more serious about my finances, and my investments and things like that. Started learning about day trading. Then of course, real estate was always another option on the table. I think you have to be careful when you look into some of these different side hustles, because you can come across a lot of snake oil salesmen. I have to wonder, as I’m looking into this, and learning about this individual, if they’re just trying to – they’re dropping breadcrumbs, and they may want you to purchase an e-book, or their course, their mentorship course, and it’s really vague. I’m like, “Am I going to spend this money to invest in learning about what could possibly be a trend, or I don’t really know how reliable this side hustle is?”
The more research I would do, I just continued to come back to real estate. It’s stable, dependable, there have been reliable returns for probably the last 100 years. Real estate just has a very fixed presence in the investment market. I think, the other thing for me was having so many trusted leaders, as I would listen to podcasts, or books, or watch YouTube videos. I remember, I was watching a dropshipping YouTube video one time, and I mean, it was a kid, a 16-year-old guy. There’s nothing wrong with that. He may grow up and be a really successful entrepreneur, but I just don’t know how much I trust that 16-year-old kid, versus listening to podcasts, or books about real estate.
You’re going to come across some really successful, trustworthy entrepreneurs who have really established themselves in the market. Really, it was just that trusted leader influence that continued to draw me back to real estate. Then I think the last piece of things, my dad all while I was growing up, my dad actually owned a mobile home park. I was able to see that side of things and see what it was like firsthand to be in real estate investing. I was inspired. I trust my dad. My dad was a really smart businessman, and I knew that if that was an investment vehicle that he was using, that it was probably something that I would love to look into, and also, would love to continue building that legacy.
[00:15:27] DB: No, that makes a ton of sense, particularly with just the longevity of real estate. The real estate has been around for so long, people have mastered it in many, many different ways. I mean, aside from some of these house flipping shows that are on TV that made it flashy, it’s really just not. It’s a pretty boring investment strategy compared to a lot of things, but I think that fits. From the example of your dad owning a mobile home park, I think that also speaks to the variety of real estate investments that’s out there. Just saying that you wanted to get into real estate. What does that mean? How did you figure out which area of real estate you wanted to start to get into? Just real estate in general is a very broad category.
[00:16:10] DR: I think my real estate why is that this was going to offer me an opportunity to really flex my entrepreneurial muscle. It’s something that I didn’t really have a lot of control over my day job, and this is something that I can take ownership of. Again, I wanted to position myself to be in control of my own destiny, be able to be my own boss. I don’t have to answer to anybody, and have the freedom to travel and do the things that I really want to do. That’s really how, or what drove me to choose real estate and begin to go down that path.
[00:16:44] DB: Yeah, there’s themes you’re talking about, about being your own boss, the freedom, the entrepreneurial muscle. Even that can apply to whether it’s mobile home parks, or storage units, or apartment buildings, or single-family homes, or vacation rentals, or all those different things. Within that whole spectrum, what started to light your fire as you learn more about real estate?
[00:17:03] DR: Yeah. That’s a great question. It’s really tough to think about, because there are so many different roads you can take within real estate investing. To be honest with you, that was probably something that was a little bit intimidating to me at the beginning of trying to figure out what side hustle I wanted to pursue, or how I wanted to achieve financial freedom, and maybe something that held up my journey. Really, I think it’s just figuring out, looking at all the different factors and figuring out what is going to help you to be the most comfortable in your decision-making process.
As I was looking, I was thinking, I was looking at the ROI that I wanted to get out of this. Really, as I’m making a decision of whether I want to invest my money in something like the stock market, or something like real estate investing, what’s the first thing that we do when we make a decision to invest in the stock market? We’re probably looking at those different funds, and then looking at historical returns, right? I want to know that if I’m investing my money in real estate, that I’m going to be getting a good return on that investment.
Really, I just started to research. I knew the city that I wanted to look at, and that was back home in Louisiana. Being in DC was just cost-prohibitive. I started looking in the city and just getting them MLS listings and really seeing what different homes we’re going for, learning more about the prices. Then I would also look at the same exact market and neighborhood, as far as what homes were renting for. That’ll give you a good idea of, and a good sense of the budget that you would need to purchase these homes, depending on how many bedrooms you want and depending on what your rental rates and things like that are going to be.
Really, it was just a lot of research into the market. Once you know the market, you have to think about other factors, like how many bedrooms and bathrooms do you want? Are you looking in that certain class of neighborhood? Do I want something that’s going to have capital expenditure type repairs? Or do I want something turnkey, and that’s going to be minimal, easy to manage, things like that? Do I want to be a landlord? How much responsibility do I want to have in this project?
I think, really, it’s the investor’s comfortability with the investment and how involved they want to be. I ultimately decided I was looking for something around three to four bedrooms, maybe a couple bathrooms, probably, in a B2C neighborhood. I knew I was looking back home. Then based on the price, and the amount of money that I had saved up for a down payment on the home, that guided my decision into what I was looking to purchase.
[00:19:36] NH: Yeah, you mentioned that and I think it’s important about trying to invest back home. Out of state investment, not where you’re local. Was that intimidating? Did that feel like, “Oh, no. This is an easy decision. I know that this market is going to work and I trust it”? A lot of people is going to struggle with that. “Where do I invest?” You’re talking about Metro DC area, crazy, expensive location, versus back home. Was that an easy decision, or was it intimidating to think about investing out of state?
[00:20:02] DR: I almost feel bad saying that it was my decision, because to be honest with you, it was almost out of my hands. Certainly, there were factors that went into me making the decision, but I think the first and foremost was that DC was really going to be cost-prohibitive to me. The home prices are just astronomical. I even looked into surrounding areas right outside the DMV area. Really, you would have to go a couple hours outside of DC to really get into the market that would be priced at what I was interested in looking in. I don’t own a car in DC, and I’m thinking, it would be just as easy for me to invest in Louisiana as it would a few hours away from DC. There was really no advantage to investing locally, if you would call that.
The other huge factor that went into the decision-making process is even though I’ve been in the DC area for seven years, I still feel relatively new. It’s such a huge city that I don’t have any established key contacts, or a trusted network, certainly not in real estate, maybe in pharmacy, but not people that I would really rely on to really help me in this journey. I think, if there’s one thing that I’ve learned, you’ve got to have a dependable team of people around you to help you in this process. That just wasn’t going to be an option in DC. Louisiana was really attractive to me, because I still have family here, so I’m here often.
Then the other thing is that I have people that I trust, that are in lending, that are in real estate, that are realtors. I had all the pieces to the puzzle to be able to look at back home and know that I would have people there to really help me and allow me to be more successful and confident in my decision-making.
[00:21:52] DB: I just put so much emphasis by what you’re saying, with a dependable team. That is so crucial in doing this, particularly when you are a full-time busy pharmacist. Then even more, when you try to be out of state, because you can’t just after work, go check out a house or something like that. You need a team that you trust. How did that work as far as finding that real estate agent, though? Because oftentimes, a real estate agent is the core of getting started in that. The real estate agent tends to know a bunch of other people. How did you find an agent? Then how did things go from there?
[00:22:23] DR: Yeah, I totally agree. I had a close friend that I – or not a close friend. I had a friend in college that I would see every once in a while, and she ultimately ended up going into real estate and becoming a realtor. I was fortunate enough, during the pandemic, actually, I was coming back and forth between Louisiana and DC, visiting family., I was leveraging that time where I was working remotely to be able to visit my family, my nephew. When I was home, I started to run into her. We run in the same friend circles. I knew that I was going down this journey of wanting to begin investing in real estate, and so I started being more vocal about that, when I would meet people, I would express that, because I feel like, if people know that you’re looking to get involved in investing, they may have contacts that they can put you in touch with.
Really, we just happen to meet up a couple of times by chance. I started to say, “Hey, I’m really getting serious about looking for a property.” Her mom has actually been a realtor for 20, 25-plus years. That was another advantage is that this is a family business and I know that they’re really knowledgeable about the market. Even though we were not really, really close, she was someone that I had a prior established relationship with, and that I could really trust. Then I also knew her mom could be an advisor to us in the process. She had experience with real estate investing as well, so not just primary homes and secondary homes and things like that. That was attractive as well. It started with her.
Then again, I would have family friends that had a few that were mortgage lenders. My realtor had a really great GC that she recommended. If I had to take on repairs after I purchased the property, it was really attractive to know that she had an established network that I could take an advantage of, that that was basically an extension of her. It was just really nice. That was not something that I ever could have found in DC, at least not without a much more significant amount of time. Just takes time to build relationships and trust. Already knowing her for several years since college, knowing that she’s a good, ethical person, reliable, dependable, hardworking, those were all things that really solidified my decision to begin working with her. Then again, her having a network was just an added bonus.
[00:24:38] NH: I mean, that part is huge about having the team established already and finding somebody that knows investment properties. It’s funny, a lot of people have a friend that’s a real estate agent, but not everybody has a friend that’s a real estate agent who’s savvy enough and experienced enough that actually help with investment properties. It’s really cool that you had that and were able to tap into that resource, because not everybody has that right away. That’s awesome.
Early on, again, you joined the None to One course. We’re going to the criteria working to that. You guys actually found a place right around the middle of the course, or near the end that met all the criteria. That’s like, when all of us, our blood starts pumping. We found a place. It needs to checks enough of the boxes. All right, we’re going to do this. I love how you maintained your cool for the whole time, instead of just emotionally going all in. We sat back and we clinically evaluated it. I really wanted to walk through that process. Was that hard? Or did you feel prepared for that?
[00:25:34] DR: Sure. Yeah. You know what? I’ll be honest, it was a lot easier than I really expected. This is a shameless plug, but I was coming out of the YFP course. It really just helped me to feel super prepared to make that decision. I would equate it to in pharmacy school, you know going into an exam, whether or not you’re prepared. I would always say, my smartest friends were always the quickest to finish their exams, because they knew right away. They would know most of the exam. Then the ones they didn’t, they were like, “Well, I don’t know the answer. I’m not going to waste any time.”
For me, it was very similar evaluating a deal, because we had run through so much deal analysis. I’ve looked at so many different properties. I think I started getting MLS listings, and had told my realtor that I was looking to purchase something back in October, or November of 2021. At this point, I’m constantly, every week, looking at a number of properties and running the numbers. The more and more you practice, and the more and more you look at properties, and you see what they’re selling for, you become more familiar and more in tune with what’s happening in the neighborhoods.
Numbers that are looking great deals, they stick out like a sore thumb. It’s funny, because I think I had just told you a few weeks before that I may be looking to move. I don’t know if I’m going to purchase an investment property right now. Then, I get this listing and it’s like, “Oh, man. This is too good to be true. I’ll pass up on this.” It really got me excited. I think that’s how I also felt assured that this was a good deal, right? Because I was not eagerly looking. It just fell into my lap and I was like, “This is awesome.”
The first thing I noticed, obviously, was the price. This was a home that was priced super competitively. It was in a great neighborhood in my city. It was not newly updated, but it was obviously impeccably well-maintained. It had a brand-new roof, brand new HVAC, stove and fans. There was also a storage building. Those were things that were also important to me, because being an out of state investor, I was like, I don’t want any major capital expenditures, or repairs. That is not something that attracts me. I also thought I could come in and do minimal updating. Maybe some, what you guys call neutral, clean gray paint, and maybe do a little bit of kitchen fixtures. That that looks great to me. Then based on the price, I was thinking I can put 20% down. Everything just worked. I felt the numbers looked great when I initially evaluated.
[00:28:11] DB: That’s a really exciting step. It’s not this overnight success thing of you started reading and three days later, there was this great deal and jump it. This is six months of preparation. I don’t want to blow past that either. Six months of looking at listings, getting more comfortable with your numbers, to the point where when it came, you knew, and you could jump in with confidence and jump into that analysis further.
When you started trying to peel this back a little further, and you’re looking at this house, first off, it met your criteria, so you knew that it was worth going a little further. What did you find once you started digging in a little further?
[00:28:45] DR: Yeah. Of course, I mean, when I started running the numbers, I’m really using estimates. I’m using things from Zillow. I know there’s going to be a little bit of variability there. These are loose estimates. The next step for me, I think, that night or the next day, I am trying to do my due diligence and actually verify, plug in the 100% accurate numbers into my deal analysis calculator. I’m talking to lenders and actually figuring out what mortgages and what interest rates they’re going to be able to offer me.
Then, I’m actually calling the tax assessor’s office to figure out what the property tax looks like. I’m taking the steps on my side to trust, but verify. As I speak with lenders, I’m realizing that the interest rates are going to be a little bit higher than what I had initially expected. I’m at a little bit of a disadvantage, because I’m limited to an investment property loan, where you’re going to have to put down a larger down payment. Typically, the interest rates can be obviously a little bit higher than if it were a primary home loan.
That’s what I’m looking at, because I’m not purchasing a property in DC. It’s not something I’d be able to house hack. It’s not really going to be a secondary home that I’m going to be visiting. I’m exclusively looking to rent this. As I’m working with the lenders, I’m realizing that okay, my principal and interest is going to be a little bit higher than I had anticipated. Then, I think the biggest surprise and shock was that the current tenant, the current property tax per month was $53. I’m thinking, “Wow, that’s a fantastic deal.” Then I call the tax assessor’s office, and she tells me, it’s going to be over a 150. I’m like, that is triple what the current tenant is paying and what I’m actually seeing.
I think, the current tenant may have been elderly, and there may have been some deduction that they were getting. That was something that between those two things, totally changed the numbers. I think, when I had initially ran the numbers, I was looking at something like, maybe $500 a month of rental income. Even a couple $100. It may not look a huge thing, but then you start playing with the numbers, and then there’s all these other factors.
One of the other big things for me was that to be able to get down to a five and a half percent interest rate, which was going to be the most competitive for my situation, I was going to have to now put down 25%, instead of 20%. Now I’m looking at almost depleting my savings pool, which is what I was going to pull this down payment money out of, and I’m going to be in a position where I have very little emergency savings. If something were to go wrong, I really don’t – I no longer have that to fall back on.
You also have to think of your closing costs. I’m looking at making some repairs, so I want some money on the side to be able to go in and make updates before I can even begin to market and rent the property out. I’m looking at this, and I’m starting to say, okay, this is going to be a much larger – a significantly larger investment than I initially thought. Now, the rental income is not going to be quite where I thought it was when I initially found the property. All those were factors weighing on my decision.
[00:32:05] DB: No, and there’s some gold in there. I want to make sure that we repeat a few things that you said. One is, the trust. Trust but verify, right? You went and you checked all the numbers with the lenders to make sure, and that’s where you found that a little more down payment, little less emergency fund can get scary. I think, that’s very legitimate. We had a house that it probably couldn’t have been more than 90 days after purchase on one that we did, where the furnace went out almost right away. That can be a big expense. Those kinds of things happen. Setting aside a $100 a month for three months doesn’t buy yourself a furnace. You do need that emergency fund going in.
Talking with the tax assessor’s office, I think is a huge tip for people to hear, because in different municipalities, sometimes those property taxes can reset with a new buyer for many reasons. I think, you found that to be the case there. Those really change that deal. How did that play into the outcome? Especially after six months of looking, there’s got to be at least some emotional attachment to this. Like, “I want this. This has to work,” right? How did you push against that, to make a conclusion you’re happy with?
[00:33:15] DR: I mentioned this a minute ago, but one of the other things was an extraneous circumstance, I’m potentially looking to move this year at some point in the future. I’m also thinking, not only am I essentially depleting the money that I have saved, but I’m also – I may be limiting myself when it comes to actually purchasing my own primary residence, which there’s a lot of opportunity there. That can be a property that maybe I look at house hacking, or leveraging as a rental property a year down the line, into the future, when I could probably get a more competitive interest rate than an investment home loan.
I’m thinking, this has to be a decision that not only makes sense for today, but makes sense for probably the next year into the future. I wanted to weigh all that against each other. I really don’t have any – There’s no shame or embarrassment in making the decision to pull the plug. I was initially worried, because this was the first time that my realtor actually had drawn up the offer. I had all the paperwork, so I was in it.
I think the biggest thing that I was worried about was wasting people’s time. I had called Nate three times. I am like, “Man, am I going to let these people down, or disappoint these people, had these lenders on the run pulling numbers for me in the evenings, had everybody scrambling.” We’re trying to get an offer as soon as possible in this crazy market. I’m worried about people pleasing. At the end of the day, you have to understand that everyone understands, this is your money, and this is going to be one of the biggest financial decisions you make. It’s an investment. It’s a risk. Everyone was extremely receptive and totally comfortable.
My realtor was like, this decision has got to make sense for you. That really reaffirmed my trust in her that I was working with the right realtor, because she was so understanding. I could tell, it wasn’t just someone who is really just dying to make this commission and complete this sale. That was really affirming for me. Also, I think the biggest takeaway is that this was a fantastic experience. I almost equate it to going through a job interview process. Ultimately, you didn’t get offered the job. But you can look back and say, I made some great connections and network with some people that I could come across into the future.
I was able to hone my interview skills. Maybe you’re a little rusty. I had never drawn up, or had any paperwork drawn up for a home purchase. I’m reading terms that I’ve never read before, and may be vaguely familiar with. All in all, it was just a really good exercise. Because again, every step that I’ve taken up until this point, has been educating myself about real estate and preparing myself to be able to know when the right deal comes along to pull that trigger. Again, this was just another positive experience that I know, the next time that I go through this process, I’m going to be even more prepared to know if it’s a good investment or not. It’s really all positive for me.
[00:36:22] NH: I love that. That’s exactly why we wanted to have you on to talk about this, Drew. Because it’s so easy, right? We talked about earlier on about listening to podcasts, and everybody’s going to come on a show and share their best story. Here’s this killer deal I found in this crazy way that you’ve never heard of. I got numbers that nobody can possibly achieve. Their strongest, craziest victory. You’ve been humble enough, gracious enough to come on and talk about, it doesn’t always have to be that way. It doesn’t always have to work out. Walking away is not a bad thing, if you take things away from that experience, right?
You learn more about writing an offer. You learn more about what to look for. You learn a ton about which questions to ask and who to go to for those things. I think, that is the message that I want to get across to all of our audience is that this is a journey. It’s not just a either you’re an investor, or you’re not right. You’re an investor today, even though you’re not sitting there with the property in hand. It doesn’t matter, because you’re taking the right steps toward that final piece. I think that’s awesome. Again, I really thank you for sharing that story, because it’s super important.
[00:37:23] DR: Yeah, absolutely. I agree. You’re going to speak to your mentors in the real estate field. Everyone’s going to have started somewhere, and everyone’s going to have humble beginnings. I think, it’s just beginning to take those steps on the journey is the most important piece.
[00:37:38] NH: Yeah, I completely agree. I want to take us to our final infusion question. Three questions we ask everybody on the show. The very first question, as always, what’s one tangible strategy that you use to make sure that you’re investing works hand in hand with your busy pharmacy career?
[00:37:54] DR: Yeah. That’s a great question. I think for me, I started doing this years ago, but it was really being thoughtful, strategic and intentional about how I allocated my time. I knew that I wanted to get a start in real estate investing. For me, it was beginning to take those baby steps of educating myself. I would look at my schedule and say, okay, if I’m commuting for an hour in the morning, that is an hour that I can be listening to a BiggerPockets episode. I would give myself goals. I’m a person who lives by a to-do list. I’m your typical type A pharmacist. I have a to-do list and it may say, listen to five podcast episodes this month, and listen to one audio book. I may not always check off every single item on that list, but what’s positive is that I am starting that journey, and I’m beginning to educate myself.
I think, really being strategic – it’s so easy to say like, I’m going to get to that later. Then years will pass and you haven’t taken even one step. If you give yourself these small steps that are a little bit more bite-sized, that becomes a lot more digestible and easier to work into your daily schedule, even though we’re all busy with our pharmacist jobs. Then I think, the other piece of it is, in addition to educating myself, that was prior to getting to this point, and I would say, once I do purchase a property, my plan is to manage the first property that I purchased, like be the own landlord for that property. Then for my second property, I would probably want to get a PM.
I really want to learn in and out what it’s like to be a real estate property manager, and be able to evaluate what that time commitment is, and choose how actively I want to be involved in my investment journey in the future. Again, I talked a little bit earlier about how comfortable an investor is with the time commitment and what their schedule is and things like that. I want to put myself in that position to see it both ways and decide like, okay, is it worth it to spend a little bit more money and have somebody do this for me? Or, am I going to really take this into my own hands, and maybe this will be a fulfilling extra thing I do with my time?
[00:40:08] DB: Love it. I love it. Those are great tips for people getting started. What’s one resource that’s also been most helpful to your real estate journey, whether it’s a book, a podcast, a person, author, website, whatever that would be?
[00:40:20] DR: I promise, I am not being paid to say this. It really was taking the None to One real estate investing course with you guys. The reason that I say this, the timing was actually so crazy. We started the course in what, the beginning of the year, February. Around that timeframe. I told you guys, it was in November that I probably started getting MLS listings and looking for properties. Again, my answer to my last question was that I was giving myself bite-size to-do lists. The next thing on my list was to actually invest and take a course in real estate investing. I swear.
I was actually evaluating this other course, and it wasn’t ran by a pharmacist. I want to say, it was going to be maybe a $1,000. I remember texting Tim Ulbrich. I was like, “What are your thoughts on making an actual investment into this as a side hustle?” I felt for me, it would give me some buy-in. I was like, this is a lot of money before I even do anything. The timing was just crazy, because it was around that same time, at the beginning of the year, that I heard about the None to One course. I would say, man, it was just so influential and to helping me to get to the point where I was ready to pull the trigger.
Because I would say before I took the None to One course, I felt more educated. I’ve been listening to podcasts and things like that for the last few years. What the None to One course gave me was really a lot of deal analysis and putting everything that I had learned into practice. I wouldn’t say that was something that I was actually doing in my own free time. It was almost like, preparing for calculations on the NAPLEX exam, and you’re making sure to – you’ve really got to practice. That’s the only way you’re going to get better at that. That’s what helped me to be so confident even about being able to pull the trigger and purchase that house that I ultimately didn’t purchase.
[00:42:12] NH: We appreciate that, Drew. That means a lot. We had a fun time with that course. Again, it was just –
[00:42:15] DR: It was awesome.
[00:42:16] NH: It’s great to have you along. Thank you. Then the last question there, what’s one piece of advice that you’d give to a pharmacist contemplating a start in real estate investing?
[00:42:24] DR: I love that question, because this is the most influential advice that I came across. I’m going to steal it, but it is take baby steps to begin the process. If you’re interested in real estate investing, upfront, it’s going to seem intimidating, right? If I say, I want to get involved in real estate investing and purchase a home in a few months. That is not going to seem like it can be accomplished, or that it’s feasible. If you say, you know what? I’m going to start listening to this many podcasts episodes a month. I want to read these many books this year. I want to actively take a course. I want to invest in my learning. That’s what I would tell somebody.
Take it seriously. Educate yourself in the field, invest in your learning, even if you have to pay someone, and then devote time toward actually developing relationships with trusted mentors, or other people who have been successful in the field. That’s going to be more invaluable than anything. I feel like, that’s probably where I’ve gotten some of my greatest knowledge is just having one on one conversations, and being able to bounce questions off people that they’ve done this, and they have 10 properties, and they’ve demonstrated success in real estate.
[00:43:34] DB: I love it. I love it. This is inspiring stuff. If people want to reach out and talk further with you about this, how would they find you?
[00:43:41] DR: Sure. Yeah, I am @drewreg on Instagram, or LinkedIn. Disclaimer, I don’t have that 10 property portfolio right now, but I’m happy to share any of the knowledge that I’ve gained along the way and meet with anyone else who’s interested in getting their foot in the door into real estate investing.
[00:44:00] NH: A good plug, too. If you are thinking about joining the None to One course that again, Drew is an alumni of, we will have the alumni back, and they’re still part of the exclusive Slack channel that you get access to. If you really want to connect with Drew and be a part of the same journey, again, a reminder that you can learn more about the None to One course, we’re about to launch the second round of at yourfinancialpharmacist.com/nonetoone. That’s N-O-N-E-T-O-O-N-E. Definitely recommend checking that out.
Again, Drew just super appreciative that you came on, shared your story today. Again, I love not talking about a victory for a second, and just talking about the journey and the process, because that is what most of us go through. That’s the reality of real estate investing. I think, that’s cool that we’re able to share that today. Thank you again for coming on and sharing that.
[00:44:51] DR: Yeah, love it. It was a pleasure.
[00:44:53] DB: Thanks so much.
[END OF EPISODE]
[00:44:54] ANNOUNCER: Thanks for listening to the YFP Real Estate Investing Podcast. If you like what you heard on today’s show, please leave us a review and subscribe to the show, so you never miss an episode. If you have a question, know someone that would make a good guest, or want to connect with Nate or David, head on over to yfprealestate.com and join the growing YFP Real Estate Investing Facebook group.
As we conclude this week’s episode of the YFP Real Estate Investing Podcast, an important reminder that the content in this podcast is provided to you for your informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation, or offer to buy or sell any investment, or related financial products. We urge listeners to consult with their financial advisor with respect to any investment.
Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on this podcast. Opinions and analyses expressed herein are solely those of your financial pharmacists, unless otherwise noted, and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.
Thank you for your support of the YFP Real Estate Investing Podcast. Have a great rest of your week.
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